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Telecommunications Lucent defends pension plan (Do the French live longer?)
Telecommunications Lucent defends pension plan (Do the French live longer?) | Lucent defends pension plan (Do the French live longer?) |
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| by Stuart Corner | |
| Tuesday, 22 August 2006 | |
  
Reports to this effect have been circulating in the press for some time and in a filing with the SEC on 21 August, in a statement made originally via an internal newsletter to quell employee concerns, Lucent said: "Lucent's pension plans remain well funded under the federally mandated ERISA rules. That means that there are more than enough dollars to provide for every liability expected under the pension plan using the rules the US...Our plans, as measured by Generally Accepted Accounting Principles (GAAP), have about $34 billion in assets - more than enough to cover the $31.3 billion in liabilities, as of September 30, 2005." Speculation of the shortfall had been fuelled by an analyst report alleging that, if Lucent employed Alcatel's assumptions for calculating the assets and liabilities of its pension, then there would be a pension funding gap. Lucent dismissed this suggestion as "irrelevant and inappropriate", saying: "given the demographics of the plan participants and the duration of the obligations - the length of time we typically provide pension benefits for participants - of Lucent's plan differs from that of Alcatel's plan." Which is a nice way of saying that Lucent does not expect its retirees to live as long as Alcatel expects its retirees to live. Lucent said that it and Alcatel were "on track and remain confident the deal will close by the end of the calendar year," adding: "We intend to hit the ground running when the merger is completed and continue to be confident about achieving the stated synergies over the time frames previously disclosed." |
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